Absolute Returns Are An Absolute Joke
“The mutual fund industry offers investors a remarkably wide range of strategies to suit their investment needs. The absolute-return strategy is one of many offered for investors to choose from. As with all funds, the strategy’s approach and risks described in detail in fund disclosures.” Rachel McTague, InvestmentNews, October 24, 2011
The greater fool theory is alive and well on Wall Street. The asset management industrial complex–who I call The Pirates of Manhattan, in its continual obsession to sell consumers financial products of questionable value have led the consumer into another maze of blatant misrepresentation.
Absolute, according to the American Heritage Dictionary. means 1. perfect in quality or nature; complete 2. Not mixed; pure: absolute alcohol.
The asset management industrial complex are master wordsmiths, spin doctors extraordinare. Calling mutual funds an absolute return is a scam, there is no absolute returns in the market, yet The Pirates of Manhattan continue to play God. Absolute return funds, which lifted the branding name from the hedge fund industry, maintains that they can achieve a positive return no matter the market will do. Of course everyone would want to achieve positive returns, we all want to be rich, good looking and have are children become Rhodes scholars. This of course is a blatant lie, promoting the greater fool theory is alive and well on Wall Street for the masses.
According to Morningstar, the average absolute-return fund it tracked up to the end of September 30, 2011, was a drop of -4.4%, not bad as the -10% drop in the S&P 500, but certainly not positive. And although this market reaches new zeniths on the chimera of a recovery of the European debt crisis, no doubt more pain is in store as the problems of the welfare-state and a dysfunctional banking system remain alive, a sickness so strong it is doing push ups in the parking lot.
Of course, the holy water for Wall Street is greater disclosure of the risks in prospectuses which no one reads. But this absolute scam of absolute return mutual funds is nothing in comparison to the complete transfer of wealth with target-date mutual funds, which make collateralized debt obligations and derivatives a game of marbles. The Pirates of Manhattan II: Highway to Serfdom is coming soon. www.thepiratesofmanhattan.com
Check out the article in InvestmentNews www.investmentnews.com, ‘Absolute return’ is absolute nonsense’ by Jeff Benjamin